Matrixport View_Technology #7

Matrixport Research

Summary

  • As ETH 2.0 continues to progress, the issue of scaling has resurfaced. Vitalik Buterin, the founder of Ethereum, has suggested using layer 2 scaling solutions to temporarily boosted ETH 2.0 transactions per seconds (TPS) during the initial phases of ETH 2.0. One of the suggestions, rollups, is being tested by Curve and Matter Labs. The two parties are working to launch their first zkSync layer 2 smart contracts testnet on the Ethereum blockchain. The success of the trial could have further ramifications on how ETH 2.0 will approach its scaling issues.

  • Litecoin has launched its MimbleWimble protocol testnet on its blockchain. Following prior announcement, the testnet went live on 1st October and is currently catered to developers. The team is working to strengthen the code before launching the testnet for public’s usage.

  • In October, another major hack occurred within DeFi. Harvest Finance, one of the key asset management DeFi protocol, had an “engineering error” and allowed hackers to steal $34m from its vaults. The team is currently working on fixing the error and there has been no updates on the stolen funds.

Public Blockchain: Mainstream Tokens

New Proposal to Scale ETH 2.0 to 100,000 TPS

Scaling Proposal ☆☆☆

  • Vitalik Buterin issued a new scaling strategy for Ethereum, focusing on rollups, plasma and state channels for the current phase ETH 2.0 until the launch of phase 1

  • Although ETH 2.0 is coming to fruition, the increase in scalability of the base layer will only arrived in the last major phase of ETH 2.0, therefore there is a need for a temporary layer 2 scaling solution

  • As such, Vitalik suggests using layer 2 solutions such as rollups, plasma and state channels for the early stages of ETH 2.0 to meet short term demands of increased transactions

  • This solution could also have future ramifications, by reorienting the future of ETH 2.0, with the base layer focusing on consensus, data availability and security while scaling take place on layer 2

First User-defined ZK rollup Smart Contract Launched on Ethereum Blockchain

Testnet Launch ☆☆☆

  • Curve and Matter Labs teams unveiled their first zkSync layer 2 smart contracts testnet with Curve Finance as the first dApp on it

  • zkSync introduced an EVM-compatible rollup using a combination of SNARK-friendly Zinc VM and PLONK proof verification for Ethereum

  • As the Zinc programming language is non-Turing complete, Curve contracts must be re-written to a Zinc version to function properly

  • The testnet for user-defined contracts is fully functional and will allow users to write and deploy smart contracts, test them locally, and generate zero-knowledge proofs in a smart contract execution

  • Should the testnet be successful, it will become an important step in scaling up Ethereum, enabling a rollup-centric scaling approach to be implemented across ETH 2.0

Public Blockchain: Others

Litecoin’s MimbleWimble is Live on Testnet

Testnet Launch ☆☆

  • On 1st October, the MimbleWimble protocol on the Litecoin network went live on testnet, with the code for the protocol found on GitHub

  • The testnet is currently close ended, with the team aiming to allow more Litecoin users to test the testnet in the upcoming days

  • The team is currently working on the fragile areas of the code and looking to harden the code while validating the remaining consensus rules

  • By November, the team aims to share a detailed plan of all the remaining work necessary to get MWEB (Mimblewimble Extension Block) merged with the main repository, so that miners and node operators can start signaling for activation in 2021

Blockchain Adoption in Traditional Industries

Financial Industry

  • Venezuela government announced the establishment of its new decentralized stock exchange build on Ethereum. The exchange is a DeFi platform running on the Ethereum blockchain, where traders will be able to exchange tokenized traditional assets in the form of ERC223 contracts (an alternative to ERC20) and ERC721 (unique tokens). (Digital Exchange; Tokenization ☆☆)

  • BNP Paribas completed a Proof of Concept with cloud based crypto wallet provider Curv, to demonstrate a highly secure way to transfer security tokens. The security token was transferred using Curv’s advanced cryptography which utilizes a concept called multi-party computation. The collaboration could be the first step to launching an integrated crypto custody solution. (Proof of Concept; Partnership achieved ☆)

  • Paypal has enabled customers to buy and sell Bitcoin and other cryptocurrencies using their Paypal accounts. The cryptocurrencies in the account can be used as currency to purchase items on the Paypal platform. Paypal has announced its plans to roll out merchant support for the US market in the new few weeks, with more purchasing options available for customers in 2021. (Digital Wallet; Product launch ☆☆)

  • DBS, Southeast Asia’s largest bank, published an announcement revealing it was launching a cryptocurrency exchange. The bank published information on the subject and then swiftly removed the announcement. According to deleted information retrieved, the exchange will offer trading services from fiat currencies to BTC, BCH, ETH and XRP. It will also offer a digital custody service for customers. (Digital Exchange; Proposed launch ☆☆)

Security Incidents

DeFi

  • An “engineering error” on Harvest Finance allowed hackers to steal $34m in a flash loan attack. The attackers stole USDC and USDT reserves from vaults by issuing themselves a flash loan that allowed them to temporarily manipulate the value of Harvest’s reserves held in Curve. Harvest team has vowed to rectify the error and is pleading the attacker to return the stolen money. ☆☆

Importance level：low-☆; medium-☆☆; high-☆☆☆

Sources: BBC, Bitcoin.com, Cryptonews, Cointelegraph, Coindesk, Ethereumworld, Decrypt, Medium, analyzed by Matrixport

Disclaimer

Matrixport provides this analysis as general information only. Matrixport accepts no responsibility for the accuracy or completeness of any information herein contained and Matrixport shall not be responsible for any loss arising from any investment based on any forecast or other information herein contained. The contents of this materials should not be construed as an express or implied promise, guarantee or implication by Matrixport that the forecast information will eventuate. The cryptocurrency market is highly volatile. Buying, selling, holding, or investing in cryptocurrencies or related product carries various risks and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before participating in the cryptocurrency market. Matrixport is not acting as a financial adviser, consultant or fiduciary to you with respect to any information provided. Any information available here is “general” in nature and for informational purposes only.